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3 options for dividing a business in divorce

by | Apr 20, 2021 | Property Division

It is not uncommon for a married couple to work together over the years or decades to develop and run a profitable business. After a significant amount of planning and hard work, they might have built the business into a successful organization that is poised for future expansion. Unfortunately, when divorce becomes a reality, some critical questions about the future of the business must be addressed.

In general, the divorcing couple will explore three options when deciding how the family business must be divided:

  • Sell the business and split the profits: The divorcing couple might decide that neither one wants to hold an interest in the family business. In these situations, the organization must be properly valued and then sold. Business valuation can be a complex process, but once the couple arrives at an acceptable price, they can sell the business in its entirety and split the profits – giving themselves the funds and independence to start a new business untethered to their ex.
  • One party buys out the other: Like the first option, the business must be thoroughly examined to determine what the market value is. With this agreed-upon value, one party can purchase the other party’s interest in the organization. It is possible that one spouse would like to continue into the future with the business, but the other spouse would rather wash their hands of it. This is an option that allows for that split and both parties can move on.
  • The former spouses continue to run the organization together: Based on the unique circumstances of the marriage, the business and the couple’s relationship, it is possible that the two spouses will continue to run the organization even after their separation. This can generally be accomplished through the division of responsibility and numerous other factors.

It is wise to work with an experienced attorney when determining the proper division of assets and debts in a divorce. Whether it is physical property such as the family home or vehicles or digital property such as an online storefront, the divorcing couple must thoroughly address marital assets to reach an equitable split.